Elucidate what is socially efficient quantity of public good

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Reference no: EM1363113

There are two workers, Each worker's demand for a public good is P = 20 -Q The marginal cost if providing the public good is $24. The accompanying graph summarizes the relevant information.

a What is the socially efficient quantity of the public goods?

b How much will each worker have to pay per unit to provide the socially efficient quantity?

c Suppose the two workers contribute the amount needed to provide the quantity of public good you identified in part (a) and (b). A third worker values the public good just like the two contributing workers, but she claims not to value the good because she wants to "free ride" on the payment of the other two workers

1 Given the three workers' true demands for the public good, is the amount of public good provided by the two workers socially efficient?

2 Compare the level of consumer surplus enjoyed by these three workers. Which worker(s) enjoys the most surplus?

Reference no: EM1363113

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